MNI BRIEF: ECB To Remove More Restrictiveness If Data In Line

MNI (LONDON) - A gradual approach to dialling back eurozone monetary policy restrictiveness would be appropriate if incoming data remains in line with the European Central Bank's baseline projection, Chief Economist Philip Lane said on Monday, adding that the ECB should "retain optionality about the speed of adjustment." 

"If the incoming data indicate a sustained acceleration in the speed of disinflation or a material shortfall in the speed of economic recovery, a faster pace of rate adjustment may be warranted. In the other direction, if the incoming data indicate slower-than-expected disinflation or a faster pace of economic recovery, then a slower pace of rate adjustment may be warranted," Lane said.

Lane spoke days after the ECB cut the benchmark deposit rate by 25bp for the second time in the current cycle, leaving the rate at 3.5%. He again emphasised that policymakers remain data dependent and will decide policy meeting-by-meeting. (See MNI ECB WATCH: ECB Cuts 25BP, Does Not Commit To Rate Path  )